Anatomy of a Cryptocurrency Scam (Part One)

Investigations Jun 26, 2020

If you've been in the crypto space for any amount of time, then you're more than likely familiar with a project called, '' ($MCO).

The primary reason behind why '' has gained so much attention this year is due to its price action.

Below is a chart that shows the price of '' in December 2019

From that point, the price has appreciated exponentially up to its all-time high, which was reached just a few days prior to the time of publication on May 8th, 2020:

This gain represents an approximate +270% appreciation in the price of the YTD.

Is This Increase in the Price Due to the Growing Fundamentals of the Project?

Short answer? No.

Long Answer

In order to understand why the short answer to the question posted in this section's subheading is 'no', we need to first understand what coin's proposed "value offering" is.

In other words, 'What is it that this project is claiming to do? What features come with this token and what idea / function is it attempting to achieve in the future or claiming it can perform now?'

Quick Footnotes

Another crypto company that claims that they'll be able to provide a 'credit card' to users (via Visa, at that) —— instant incredulity, but let's just go ahead and humor this for a second

May 15th, CoinDesk put out this article: ; title states, " said Friday it has begun shipping its crypto-to-fiat cad, the MCO Visa, across the European Union."

Article above cites this press release by the company ( on their website claiming that they received the "Green Light" for Europe =

Taking a Brief Lookback at Monaco

For those that don't know, '' was formerly known as "Monaco". Thus, in tracing back this project, we must start there.

Taking a Real Look at Monaco

Okay, let's get into the real work here.

A Brief Google Search Later

The above excerpt is from 'Investopedia' (written in 2018); URL =

Notably, just two or three paragraphs down the page, Investopedia writes:

"Monaco has multiple offerings. They include cryptocurrency-backed Metal Visa cards which require varying amounts of MCO tokens to be held. The user's cryptocurrency holdings essentially back his card. All Monaco Visa cards come with zero annual fees, cashback schemes, and basic card features.


Okay, let's go back to '' again and make sure that we're not having Deja Vu here.

Quick Trip to '' References / Documentation

(we literally visited '' in this case)

We can see the same offer that was described on Investopedia's website (for Monaco) displayed directly on the front page.

Spoiler Alert: is Monaco

This is a fact that some know - but not everyone.

Yes, this fact was announced (in a relatively subtle manner comparatively when looking at how 'loud' the other advertising has been), but never the less - it was announced at some point.

Time Traveling: Monaco Edition

In order to get a better grasp on who '' is, we must first take a journey back in time to see "who" Monaco was.

Brief Background on Monaco

Monaco (now entered the cryptocurrency space in 2017 at the perfect time (virtually the height of the excitement and fervor for cryptocurrency up to this point).

Like most other projects that were born that year, they held an ICO to fund their project's idea: *Disseminate Visa-produced credit cards that grant its holders the ability to spend 'Monaco' tokens in the same way that one would expect to spend "regular fiat"

First Appearance on the Scene

The best point of reference for Monaco's official entry into the crypto space can be found on '' (

Quick Footnotes (we won't be too verbose here; but this is what you should take away from their initial 'testing of the waters'):

Date: "May 17th, 2017"

Original Location: 'Zug, Switzerland' (this is worth noting for a numbe of reasons that we won't get into in this piece)

Parent Company: 'Monaco Technology GMBH'

Original Product Name: 'Monaco Visa Card' (and additionally, the app too)

Project Founder: 'Kris Marszalek' (introduced as 'Founder of Monaco Technology')

Date of ICO Announcement: The article stated that the 'announcement' itself would be released on May 18th.

Targeted Contributions: 150,000 Ethereum

The article also stated that contributors in the ICO would receive a, "stake in the MCO Asset Contract"

Brief Definition of the 'MCO Asset Contract (again, according to the piece cited above):

"The MCO Asset Contract is an absolutely essential part of how value will be created for MCO token holders. Every time Monaco VISA Card users spend their BTC, ETH, or other ERC20 tokens, Monaco will charge a 1% software license fee. All these fees will be automatically sent to the MCO Asset Contract. Over time, as Monaco users spend on the platform globally, this value will accrue in the MCO Asset Contract."

A Few Initial Questions That Users Should Have Asked Themselves After Reading the Initial Proposal

How would Monaco re-distribute funds (from vendor payments; 1% fee per transaction) in instances where those payments were made in a different currency? There is no 'bridge' or means of directly transferring funds from Bitcoin into the token contract address. Thus, there would have to be some sort of centralized, trusted means of making that swap occur.

How could Monaco account for fees involved in this process? As we all know, gas is necessary to 'fuel' Ethereum transactions (although, to be fair, this amounts to a very nominal sum). Likewise, Bitcoin has an associated fee with each transaction too and unlike Ethereum, that fee is significant. In fact, in the year that Monaco launched (2017), the fee for Bitcoin had stretches of days and weeks where its aveage soared well above $15/transaction (for a transaction to be confirmed in a timely fashion).

How will vendors account for Bitcoin confirmation delays? Again, in this regard using Ethereum largely mitigates this issue because Ethereum's confirmation times are often less than one minut apart and their blockchain relies on 'account-based' settlement versus UTXO-transactions like Bitcoin, Litecoin, Bitcoin Cash, and several other Proof of Work based cryptocurrencies. As we all know, Bitcoin is designed so that it will take the network 10 minutes, on average. And any transaction that has not been included in a blog has no external guarantee of being included in a block that can be conveyed to the network or the vendor in a neutral manner. Thus, the convenience of Monaco's proposed solution could be undermined significantly by this aspect of blockchain.

How will the fees be extracted? Cryptocurrency is largely designed to facilitate actions between one party to another through the use of public key cryptography. Transactions that involve multiple parties add a substantial layer of comoplication to the process and in any case - must be constructed by the sender in order to facilitate the manifestation of such a payment. Obviously there is great incentive to ignore this responsibility for both the retail purchaser hypothetically using this card and the would-be vendor accepting this card. Thus, if Monaco were to ever expect this to be an enforceable fee, that would require the imposition of some sort of payment management control.

How Will Monaco Navigate Around MSB Requirements? Assuming the project were to ever consider distribution in the United States (which they have promised and still promise under their '' campaign), they would more than likely be forced to register as an MSB given their assumed intervention in these payments to facilitate a custom-constructed payment remediation system that fulfills the task of connecting both vendor and customer to some sort of foreign API network that relays the request / transaction to a blockchain network (after crafting such a request manually to begin with), before eventually distributing the funds for the customer and vendor using some sort of logic that they would have to design on the backend. To be clear, this is certaily not impossible - but the heavy burden associated with such an option is overwhelming.

What is Visa's Incentive to be Involved With This? ; Based on what is described, it seems that Monaco's card is actually designed to undercut Visa because Monaco is proposing that the 1% fees that they would attach to every transaction would serve as a substitute for the fee that would otherwise be paid by various vendors and commercial retailers. If that is the case, then their model does not allow for Visa to accrue any revenue from this scheme (remember, they stated that all of the funds that they would be receiving from this network would be transferred directly to the their contract address on the blockchain).

Do Ethereum Contracts Possess Sufficient Logic for This Undertaking?: In stating that an Ethereum smart contract would be used to 'store' and aggregate the total of all 1% fee disbursements collected from various transactions, the implication here is that the logic in the contract would be such that holders of the $MCO token would be able to anticipate exactly how much they would/should be paid out & the frequency of such payouts as well (would have to either be fixed or determined by specific calls made by the end user; for reference, the only calls that the end user can make is one on the contract itself [only after receiving the token] and calls to adjust their token balance in relation to another user [essentially amounts to a transaction ; more information and visuals can be found on "" - which is the top website for ERC20 token contract analysis and construction])

What is MCO's Plan For Sustainability?; Obviously, at the point that the article was written - the project was new. No one was expecting its creatores / developers to have all of the answers, but they should have at least had some. And if they didn't, then they undermined themselves by not providing enough information to prevent quesitons forming like the ones that were lited above.

There Are Many More 'Holes' in the Construction of $MCO

The 9 items that were listed above were fundamental questions that any individual with a fairly remedial knowledge of cryptocurrency shoould find themselves asking when confronted with the inadequate project outline like the '' article did (if you're thinking about blaming the author here or believe we are misattributing responsibility since, "Monaco didn't write it" - readers should know that the Monaco piece was a promotional piece and, thus, they more than likely had granular control over what was and wans't included in the piece)



Happy to serve and help wherever I'm needed in the blockchain space. #Education #EthicalContent #BringingLibretotheForefront

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